Prime Minister Alexis Tsipras asked Greece’s international creditors to withdraw their conditions for giving more money in a defiant address to parliament.
“The proposals from the creditors are clearly unrealistic,” Tsipras told lawmakers in Athens late Friday. “The Greek government cannot consent to unreasonable proposals that call for devastating measures for pensioners and Greek families. I want to believe that it was a bad negotiating trick.”
The embattled Greek leader went on the attack after telling German Chancellor Angela Merkel and French President Francois Hollande on Thursday that a list of proposals set by creditors to unlock bailout funds can’t be the basis for a deal. German and French officials declined to comment on the contents of the call.
The latest proposal was an “unpleasant surprise,” Tsipras said, adding that voters are asking the government “not to succumb to the irrational, blackmailing demands of our creditors.”
Greece notified the International Monetary Fund on Thursday that a 300 million-euro ($337 million) payment due Friday would be deferred and bundled with three more payments at the end of June. The move was a 180-degree turn by the government and caught many by surprise. While bundling the transfers is permitted under IMF rules, the deviation from standard practice adds to signs that Greece may be readying for a potential breakdown of talks after a four-month-long impasse.
Troika Terms
“The surprise move shows that the troika can’t dictate the terms of an agreement,” Mark Weisbrot, co-director of the Center for Economic and Policy Research in Washington, said in a statement, referring to the group of lenders including the IMF, European Commission and European Central Bank.
Tsipras said the IMF’s consent to the bundling means “it’s finally clear to everyone, and mostly understood by the markets themselves, no one wants a rift. And time now is running out not just for Greece, but for everyone.”
The government’s main targets for a deal with Greece’s creditors remain lower primary budget surpluses in coming years, on which the two sides have already agreed, as well as some kind of debt relief and the protection of pensions and wages, Tsipras said.
The benchmark Athens Stock Exchange plummeted 5 percent before Tsipras spoke on Friday, the most since January. The yield on Greek 10-year bonds added 31 basis points to 11.22 percent, the biggest increase since May 26. The 10-year yield is still down from this year’s high of 13.93 percent and a record 44.21 percent in 2012. The two-year yield rose 198 basis points to 25.22 percent.
Enough Cash
The IMF delay wasn’t related to a lack of funds, as Greece had enough cash reserves to make the payment due Friday, said a person familiar with the country’s financing position. The official asked not to be named as he wasn’t authorized to discuss the matter publicly.
“If they come up with alternatives on our proposal, it should be financially correct and wise from an economic perspective,” Jeroen Dijsselbloem, who leads the euro-area group of finance ministers, said in the Hague. “We’re waiting for their reaction. We were hoping to get it by today.”
Merkel and Hollande have spoken with Tsipras several times over the last week to try to resolve the standoff. The conversations “naturally are constructive,” Steffen Seibert, Merkel’s chief spokesman, told reporters in Berlin. He declined to comment on the substance of Thursday’s call.
‘Reasonable’ Plan
The IMF, European Commission and European Central Bank have “put on the table something which is very reasonable,” IMF chief economist Olivier Blanchard said earlier Friday at a conference in New York. A Greek agreement would require more financing from the IMF’s European partners and “probably some debt relief,” he said.
Even with the comments about the creditors’ plan, Tsipras said Greece is “closer to a deal than ever before” and that any agreement must end discussion about the nation leaving the euro. “It’s common knowledge that the Greek side has proposed a realistic framework for a solution,” he said.
As the stalemate drags on, the odds of Greece exiting the common currency have risen to about 20 percent from between 10 percent and 15 percent previously, Royal Bank of Scotland Group Plc estimates. “Elections now appear very likely,” RBS strategists including Marco Brancolini wrote in a note to clients Friday. “Either PM Tsipras will opt to force the measures through (likely triggering a collapse in his parliamentary majority) or go to new elections.”
Half of Greeks said the Syriza-led government should abandon its so-called red lines if creditors don’t accept them in order to have an agreement, according to a poll published Friday by the newsit.gr website. Almost the same number, 47 percent, said they disagree with the way the government is conducting negotiations. A large majority, 74 percent, of those polled said they wanted Greece to remain in the euro. The poll was conducted June 3 to June 4.
